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INSIGHTS > New Articles > INSIGHTS > 5)Discuss how rating agencies impact the economy of any country. In this backdrop, analyze whether moving away from Western dominated rating agencies would be beneficial for India.(250 words)

5)Discuss how rating agencies impact the economy of any country. In this backdrop, analyze whether moving away from Western dominated rating agencies would be beneficial for India.(250 words)

Time and again India expresses its displeasure at the refusal of rating agencies to improve India’s score. Also India and other developing countries have raised question mark over the neutrality of the rating of such agencies. Last year’s Economic Survey also highlighted this point. Thus the topic becomes important

Key demand of the question

The question demands us to answer the following

How rating agencies work and how they impact a country’s macroeconomy

The advantages (or not) of India using BRICS platform to create a rating agency

Directive word

Analyze – Here it’s a broader directive than examine. Analyze the idea of BRICS rating agency from several dimension such as economic, geopolitical etc. Thereafter summarize the arguments you made

Structure of the answer

Introduction – Highlight that India has consistently made a demand.

Body

Describe the working of rating agencies and how they impact the macroeconomy of a country

Analyze the need for India to set up a BRICS credit rating agency

Economic

Raise capital at lesser rates

More investment etc

However debt will increase

etc

Geopolitical

Challenge the domination of west on international financial institutions

Whether India and china can work together

Etc

Conclusion – summarize your arguments and mention what precaution should India take before setting up such an agency.